Investors Challenge Monsanto Over Risks of Genetically Engineered
Products; Shareholder Resolution Calling for Report on Impacts of
Biotech Products to Be Voted on at Today's Annual Meeting
ST. LOUIS, Jan. 20 (AScribe Newswire) -- A shareholder
resolution to be voted on at today's annual meeting asks Monsanto (MON
- NYSE) to report on impacts related to its genetically engineered
products.
"Major market rejection and sudden business strategy reversals
raise doubt that Monsanto is properly evaluating the risks of its
genetically engineered products," said Michael Passoff, of the As You
Sow Foundation. "In the last 14 months Monsanto has had to abandon
plans to commercialize its most important future product, its most
important future area of research, and the country with its highest
level of market penetration."
Some of the major business strategy reversals that took
investors by surprise include: Monsanto's decision to not commercialize
genetically engineered wheat despite spending $60 million on it in 2004
alone; the cancellation of its plans to develop pharmaceutical crops;
forsaking its operations in Argentina despite 90 percent market
penetration of genetically engineered soya; and suspending its
investment in genetically engineered canola in Australia.
Shareholders see untested and underreported environmental
impacts as perhaps the biggest risk. "Contamination of conventional
crops by genetically engineered crops is happening," said Sister Susan
Jordan, coordinator of the Midwest Coalition for Responsible
Investment. "Even Monsanto's annual report recognizes the removal of
genetically engineered seed and products may be necessary, yet the
company offers no contingency plan to address it."
"There are a significant number of scientific studies that
challenge Monsanto's claims of safety and benefits," added Jordan.
"Food is not merely another market commodity; it is essential to life
and sacred culturally to all peoples. We believe that agricultural
genetic engineering has not demonstrated that it safeguards the common
good, human dignity, and the natural and social systems that sustain
life for our time and for the future. Monsanto needs to be responsible,
accountable, and socially just."
Recent reports by the National Academy of Science,
Environmental Protection Agency, Union of Concerned Scientists, and the
Center for Food Safety, among others, raise warnings about extensive
crop contamination, increased pest resistance, increased herbicide use,
impacts on non-target populations. Furthermore, the reports identify
serious gaps in testing methodologies, the regulatory approval process,
and a lack of oversight once products are commercialized.
"The biggest misperception about genetically engineered crops
is that the FDA has tested these plants and declared them safe," added
Passoff. "What the FDA has done is approved genetically engineered crop
commercialization based on Monsanto's assurance that the products are
safe. The FDA does no testing of its own nor does it monitor these
products after they are commercialized. Monsanto and its shareholders
are responsible for all legal and financial liabilities."
"As the world's leading producer of genetically engineered
seeds, Monsanto faces unique business risks," said Marc Brammer, Senior
Analyst of Innovest Strategic Value Advisors. "These risks require a
detailed assessment by management and reporting to shareholders."
Innovest has just released the most in-depth look at Monsanto's
financial risk from genetically engineered products. This report can be
found at www.innovestgroup.com
The report warns shareholders about hidden risks to Monsanto's
profitability and points out that Monsanto's stock price is likely
overvalued compared to its actual earnings.
"A sound balance sheet, bullish marketing of Ag biotech
potential, and the perception that many big litigation risks were
behind it, has pushed Monsanto's share price to all-time highs," added
Brammer, "but Wall Street's bullishness is not reflected in actual
earnings as seen in its high PE ratio of over 70. Significant risks to
financial performance remain un-examined in Monsanto's business plan
and are not properly reflected in current stock market valuations."
Among the key findings of the report are:
- the potential costs of contamination of conventional seed
with biotechnology traits is not delineated properly for investors by
management;
- the lack of regulatory oversight is not acknowledged as a
business risk since liability remains with Monsanto once genetically
engineered crops are commercialized;
- ambitious profit targets do not reflect political and
economic realities facing genetically engineered crops with respect to
consumer acceptance and commercialization;
- reliance on litigation to "capture value" and fend off
competitors is not fully acknowledged in the business plan, or
accounted for in SEC filings; and
- regular appearance of "Extraordinary Charges" on the balance
sheet as a result of environmental litigation costs and restructuring
charges imply that such costs will likely continue to be burdensome.
The shareholder proposal was filed by School Sisters of Notre
Dame of St. Louis; Sisters of Mercy Regional Community of St. Louis;
St. Mary's Institute (Sisters of the Most Precious Blood), O'Fallon,
MO; Sisters of St. Joseph of Carondelet; Sisters of Loretto; Mercy
Investment Program; Sisters of Mercy, Regional Community of Detroit
Charitable Trust; Sisters of the Blessed Sacrament; Sinsinawa
Dominicans; Daughters of Charity of Saint Vincent dePaul, St. Louis;
Adrian Dominican Sisters; Sisters of Charity of Cincinnati; and As You
Sow Foundation. The co-filers are part of the Interfaither Center on
Corporate Responsibility, a coalition of 300 religious institutional
investors and socially responsible investment firms with more than $150
billion in combined assets.
"Shareholder votes are not measured in the typical electoral
sense of receiving a majority vote," says Passoff. "Most shareholders
automatically vote with management. The votes are more accurately
interpreted in regards to their level of influence. An investor with 3
percent ownership would likely be one of the top three shareholders in
a company and a management would certainly listen to them. Many
previous resolutions receiving from 5 percent to 10 percent of shares
voted have been sufficient to move management to act."
For more detailed information on this issue, the text of the
shareholder resolution, and related financial and scientific reports,
please visit www.proxyinformation.com
- - - -
CONTACTS: Michael Passoff, Associate Director, As You Sow
Foundation, 415-391-3212
Sister Susan Jordan, Coordinator, Midwest Coalition for
Responsible Investment, 314-638-5453